posted February 09, 2001 09:51               

ANKARA, Feb 8 (Reuters) - New gas supplies from Russia and Iran will come onstream as planned this year to help ease booming Turkish energy demand, Turkey's pipeline chief told Reuters on Thursday.

Gokhan Yardim, head of state pipeline concern Botas, said the two projects -- the Blue Stream pipeline to cross the Black Sea and Iran gas pipeline -- will be operational in the second half of this year, boosting gas supplies.

"The Iran gas will be ready at the end of July and gas from the Blue Stream will flow from late October or early November," he told Reuters in an interview.

New supplies will help Turkey, which Yardim expects to consume 16 billion cubic metres (bcm) of gas this year against 14.5 bcm a year ago, to meet extra demand in 2003 from four gas-fired power plants that are being built.

"We will break even in terms of demand and supply in 2003, when these power plants will tap seven or eight bcm at their peak capacity," he said. Turkey, which has an annual 15 percent demand rise on average, expects to need 22-25 bcm in 2003. The country has suffered from the second succesive year of drought, forcing the government to minimise electricity generation from dams and harness coal and gas-fired power plants at full steam to meet the annual power demand rise of eight percent.

Russia is Turkey's largest supplier of gas and its sales will reach 13 bcm this year, up from 10.5 bcm in 2000, including a small amount to be supplied through the Blue Stream project. The remainder comes from in liquified natural gas from Algeria and Nigeria and natural gas from Iran.

The Blue Stream project envisages a 1,200 km (750 mile) pipeline with a 380 km subsea passage to carry an eventual 16 bcm of gas to Ankara. Land sections of the line are almost complete on Russian and Turkish ends and subsea pipe laying work will begin in August for completion in 10 weeks.

Iran will eventually pipe 10 bcm a year under a 23 year contract through a pipeline built between Tabriz and Ankara.

Yardim said Turkey clinched an "improvement" in prices in the Algearian LNG deal and talks were under way for similar improvements in the Russian gas and Nigerian LNG deals.

"Price conditions have changed to Turkey's benefit. The total benefit of Turkey will be $350-$400 million a year after we conclude the Russian and Nigerian deals," he said, declining to give further details.

NEW GAS MARKET LAW

Yardim said a new gas market law, being hammered out by the energy ministry, will unbundle the market by ending Botas's monopoly as gas supplier and distributor and introducing competition to the eventual benefit of consumers.

The government is also trying to pass through parliament an electricity market bill and will soon submit a petroleum market law to parlament to gradually end state control and subsidies.

"Turkey's energy road map is being drawn with all of these three laws to take effect in the months to come," he said. "This year will be a turning point in our energy history." The bills, which have been on the government's agenda for years, were dusted off when the government struck a three-year programme with the International Monetary Fund (IMF) in
December to cut inflation to single digits from 40 percent at end-2000.

The heavily subsidised energy sector has drained large budget funds and helped swell already high inflation since the 1960s.

Yardim said talks were under way for an annual five bcm of gas purchases from 2003 Azeri Shakh Deniz fields, being developed by a consortium led by BP Amoco.